The S&P 500 has been on a tear over the past two years, boasting a staggering 51% gain—its best streak since the dot-com boom. However, with soaring valuations, the index’s average dividend yield has shrunk to just 1.2%. While this may leave income-focused investors wanting, a few S&P 500 stocks still stand out for their high yields. Let’s explore the top three dividend payers in the index today and see if they’re worth considering for your portfolio.
Walgreens Boots Alliance: A High-Yield Gamble
With a 9.1% dividend yield, Walgreens Boots Alliance has the highest payout on the S&P 500. However, this isn’t a story of triumph—it’s one of a battered stock. Walgreens shares tumbled 64% last year, dragged down by declining profits and a $5.8 billion write-off tied to its VillageMD acquisition.
Despite these struggles, there are glimmers of hope. Pharmacy sales rebounded by 12.7% in Q1 of fiscal 2025, even as retail sales slid. The company reaffirmed its adjusted EPS guidance of $1.40 to $1.80 for the year. If it can meet these targets, the $1 per share annual dividend should be secure, making it an intriguing, if risky, option for income investors. Still, challenges remain, and stabilization is far from assured.
Altria: Tobacco’s Dividend Powerhouse
Altria, with its 7.7% yield, remains a favorite for income investors. As the largest U.S. tobacco company, Altria benefits from robust margins (nearly 70%), but declining smoking rates continue to challenge growth. Revenue dipped 2.5% in 2024, though adjusted EPS edged up 1.6% to $3.84, showing resilience in its core business.
The company’s Njoy acquisition signals a push toward next-gen products, but it lags behind competitors like Philip Morris International. While Altria’s dividend appears safe, stagnant revenue growth may leave long-term investors looking elsewhere. It’s a reliable income source, but without much growth potential, the appeal is limited to yield-focused portfolios.
Verizon: High Yield, Low Growth
Telecom giant Verizon offers a 6.9% dividend yield, landing it among the top-paying stocks in the index. But behind the generous payout lies a flatlining business. Verizon has lost ground to competitors like T-Mobile in the race to dominate 5G, and its revenue has stagnated at around $33 billion per quarter.
Adding to its woes is the company’s significant debt load, further burdened by its $20 billion acquisition of Frontier Communications. While the dividend is well-covered for now, limited growth and mounting debt make Verizon less appealing for investors seeking upside. For pure income seekers, however, it remains a viable option.
A Comparison of Key Metrics
To help investors quickly assess these high-yielding stocks, here’s a comparison of their vital stats:
| Stock | Dividend Yield | 2024 Revenue Growth | Key Risks | Investment Appeal |
|---|---|---|---|---|
| Walgreens Boots Alliance | 9.1% | Declining | Profit erosion, write-offs | High risk, potential rebound |
| Altria | 7.7% | Flat to declining | Smoking rate decline | Stable income, low growth |
| Verizon | 6.9% | Flat | Debt burden, competition | Reliable income, low upside |
Final Thoughts
These three S&P 500 stocks offer some of the highest dividend yields in the market today, but each comes with significant trade-offs. Walgreens presents the highest yield but carries considerable risk as it works to stabilize its business. Altria offers stability but lacks growth prospects. Verizon provides steady income but little else.
For income investors, these stocks may hold appeal, but tread carefully. Assess your risk tolerance, and don’t overlook alternatives outside the S&P 500 that might offer better risk-reward profiles. As always, diversification remains key.
